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Geoffrey Omedo: Unpacking the myths, good, bad, ugly of carbon markets in Africa – EnviroNews
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As the Carbon Markets Summit begins in Kigali, Rwanda, this week, with the participation of the African Union, AUDA-NEPAD, the European Commission, UNDP, the UNFCCC, the African Development Bank, DBSA, among many other partners, I share my 18-year perspective and reflections on this vital subject in this week’s 20th Edition of the #Africa #Energy #Finance #Pulse.
The year was 2008.
The air in our Nairobi office, ensconced in the lush greenery neighbouring Karura Forest within the United Nations Office in Nairobi, was palpable with anticipation. During our unit meetings, detailed progress on a flagship carbon market project for the Clean Development Mechanism that Kenya was advancing would be discussed.
Unfortunately, the project struggled to go beyond the Project Design Document stage!
This was the Mumias Sugar 35 MW Bagasse Cogeneration Project in Western Kenya (later formally registered as UNFCCC CDM Project Ref. 1404 on 04 December 2008). Designed to harness sugarcane milling residue – where Mumias Sugar Company (now sadly under receivership) crushed roughly 2.4 million tonnes of cane annually, generating an enormous 37% bagasse yield (an estimated 890,000 tonnes).
This initiative was designed to replace inefficient low-pressure boilers with modern high-pressure steam boilers and turbo-alternators. The technical design allowed the plant to use around 9 MW internally while exporting 26 MW of clean, renewable electricity to the Kenya Power and Lighting Company (KPLC) national grid, generating projected baseline reductions between 129,591 and 157,982 tonnes of metric tonnes of carbon dioxide equivalent per year by displacing grid thermal power and avoiding open-air bagasse decomposition and methane off-gassing.
Sounds easy, right?
Just from this initiative, I learned that carbon market projects were not a walk in the park – as policy constraints (monopolistic tendencies in generation) basically made the project untenable.
The Kenya Tea Development Agency Carbon Project Example
This was the second carbon project that we worked on in 2011-2012.
This was an innovative fuelwood decommissioning project for the Kenya Tea Development Agency (KTDA). What many people do not realise is that, for drying (curing) the black tea we enjoy taking for breakfast, immense volumes of wood fuel are consumed in factory boilers.
The result?
Massive pollution, deforestation, and degradation.
If you have ever traveled up toward Kenya’s Kericho Highlands or the slopes of Mount Kenya where tea is grown, you have seen those expansive, scenic plush lands covered by green, undulating waves of tea bushes disappearing into the mist-covered horizon.
This carbon project wanted to preserve those indigenous water towers by switching factory boilers away from forest timber.
Sounds easy, again, right? But not too fast…
As the team worked to painstakingly get these project concept note design documents – collecting the much-needed data required through the rigorous validation machinery of the UNFCCC’s Clean Development Mechanism (CDM)- something drastic happened.
The global carbon markets crashed….
This happened after the European Union restricted international Certified Emission Reductions (CERs) in Phase 3 of the EU ETS post-2012, thereby leading to secondary credit prices plummeting from over €20 per tonne to below €0.50.
This was devastating – especially to project developers on the African continent.
In Kenya, only a small number of large utility initiatives – most notably the Olkaria II Geothermal Expansion Project (UNFCCC CDM Project Ref. 3773, registered on 16 December 2010) and Olkaria III – managed to achieve commercial CER issuance before the market collapsed.
Across the entire Kyoto commitment period, the African continent secured less than 15% of registered CDM activities, with Sub-Saharan Africa capturing under 3% of standalone projects. The overwhelming beneficiary of the CDM was Asia, which absorbed over 70% of global issuances by destroying industrial gases in large chemical facilities, leaving Africa’s decentralised, high-co-benefit agro-industrial projects stranded.
From Kyoto’s CDM – to Paris Agreement’s Carbon Market Regimes
Today, under the Paris Agreement, the carbon pendulum is swinging back.
With the operationalisation of the new compliance regime (Article 6 of the Paris Agreement), there are rising compliance obligations from some premium buyers – especially international aviation under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). We also now have an institutional shift toward durable nature-based and engineered removals. Blue bond carbon markets are also emerging – where the continent equally stands at a pole position.
In fact, I daresay that Africa is now no longer on the periphery of the carbon markets.
Yet, as these markets open up opportunities on the continent, it is important to cut through conference declarations and examine the sector with rigorous, clear-eyed reality.
Here is my take on The Myths, The Good, The Bad, and The Ugly of Carbon Markets.
The Good
Africa is Rich in Carbon Stocks….Super Rich!
The “Good” begins with Africa’s huge untapped natural carbon balance. The continent is a vital ecological anchor for planetary climate stabilisation.
Let me just emphasise the Congo Basin -as an example.
At the heart of Central Africa lies the Congo River Basin, spanning 3.7 million square kilometres. Estimated to be sequestering a net 1.5 billion tonnes of atmospheric carbon annually, it remains one of the world’s few intact net tropical carbon sinks. For example, located within this basin is the Cuvette Centrale peatland complex, shared between the Democratic Republic of the Congo (DRC) and the Republic of Congo. Covering 16.7 million hectares (ranging between 145,500 and 167,000 square kilometres), this subterranean formation locks away a median below-ground carbon stock of 30.6 petagrams of carbon – roughly 30 billion metric tonnes of carbon.
Add to this the AfriMont consortium’s findings across 44 forest monitoring plots in 12 African nations-which established that African tropical montane forests store an average of 150 megagrams of carbon per hectare in aboveground biomass (exceeding unit-area biomass in the Amazon Basin) – along with coastal mangrove belts storing 218 tonnes per hectare across deep sedimentary substrates, and Africa’s ecological significance is clear.
Even more…..but the methodology to account for avoided emissions/removals in this sector still remains riddled with significant uncertainties!
Regulation – The Move to Sovereign Governance
What makes this cycle fundamentally different from our 2008 experience is that African governments are no longer passive project hosts.
Unlike during the CDM era, Africa is hard at work building the systems and structures needed to galvanise a robust carbon market edifice. As illustrated above, we are now transitioning from speculative policy toward robust, operational registry architectures to mobilise climate finance.
A few examples suffice here below:
Ghana, Kenya, and South Africa lead with fully operational carbon registries, such as Kenya’s National Carbon Registry (KNCR) and Ghana’s EPA Carbon Market Office, which has already executed the continent’s first end-to-end Article 6.2 transfer of 11,733 ITMOs to Switzerland.
They are followed by nations like Rwanda, Zambia, Malawi, Tanzania, Senegal, and Gabon, which are actively validating projects and securing bilateral frameworks, such as Zambia’s 1.6 million authorised ITMOs with Switzerland.
Meanwhile, countries like Nigeria – which has even launched the Lagos State’s sub-national registry – and Zimbabwe, with its sovereign royalty framework, are carving out new regulatory frontiers.
With 35 bilateral agreements, 12 host countries with active tracks, and 91 approved PACM activities, Africa’s structured governance models and digital MRV pipelines are proving that the continent is actively organising to turn its vast renewable and natural assets into sovereign, sustainable wealth. Out of these, an estimated 2.73 million ITMOs have formally been transferred or received.
Yet, a lot of work is still needed!
Despite the political momentum surrounding Article 6 and voluntary market monetization, national readiness remains dismally low – as out of 55 African Union member states, only nine have managed to stand up dedicated registry infrastructure: Ghana, Kenya, South Africa, Zambia, Tanzania, Rwanda, Gabon, Côte d’Ivoire, and Nigeria.
While another 16 nations report being in varying stages of pipeline development, the reality is that roughly 84% of the continent still lacks the sovereign digital architecture required to verify emission baselines, prevent double counting, issue statutory Letters of Authorisation, and execute corresponding adjustments.
Without these registries, the vast majority of African nations remain exposed to carbon leakage and unable to convert their massive natural and technological abatement potential into credible, high-integrity sovereign assets.
Across the continent, the following are major Article 6 carbon policy signals to watch for:
- Kenya – Holding five bilateral agreements, the government has recently codified a controversial statutory 10 million tonne transfer cap through 2030 to ostensibly protect its own Nationally Determined Contribution (NDC) balance sheet. It has also mandated that land-based projects return at least 40% of aggregate annual earnings to local communities through registered Community Development Agreements.
- Ghana – Leading transaction-oriented governance, it executed the continent’s first end-to-end Article 6.2 transfer of 11,733 ITMOs to Switzerland generated by Envirofit clean cookstoves. It is managing an operational registry integrated with the UNFCCC Centralized Accounting and Reporting Platform, charging an explicit $3 to $5 per tonne administrative ITMO fee.
- Senegal – Accounts for eight approved PACM activities alongside four Article 6.2 cooperative tracks, showing how multilateral frameworks can aggregate rural energy and agricultural programmes.
- Zambia – Authorized 1.6 million ITMOs with Switzerland and integrated into Norway’s $740 million bilateral procurement facility.
- Rwanda – Enacted Ministerial Instruction MI No. 001/Moe/26 with tiered revenue-sharing levies, executing bilateral cooperation with Singapore and authorising 4.7 million CORSIA Phase 1 units backed by private insurance structures to derisk corresponding adjustments.
- Malawi – Becoming an early compliance provider by applying Corresponding Adjustments to 1.5 million Gold Standard clean cookstove credits for CORSIA Phase 1.
- And many more……
Questions still linger on the complex topic of carbon pricing….
Data from the Quantum Carbon Market Review reveals that the market is currently bifurcating, rewarding high integrity, sustainable development co-benefits, and sovereign authorisations. Consider the following:
VCS Blue Carbon (2023 Vintage) – Assessed at $35.00/tCO₂e, commanding top-tier valuations due to sedimentary permanence, marine biodiversity, and coastal protection benefits.
Gold Standard Clean Cookstoves (Article 6 LoA Africa, 2024 Vintage) – Assessed at $11.25/tCO₂e, driven by verified health, gender, and air quality co-benefits.
Tanzania Sovereign Export Baseline – Sovereign approvals issued at an implied average price of $12.40/tCO₂e. Evaluating the Tanzanian benchmark alongside Gold Standard cookstoves reveals an established African compliance corridor between $11.00/tCO₂e and $13.00/tCO₂e.
When paired with CORSIA Phase 1 units clearing at $20.00 to $22.55/tCO₂e in spot and forward procurement, these figures demonstrate that compliance-grade African assets are separating themselves from unadjusted voluntary credits that linger between $3.00 and $8.00/. VCM prices were too low – and they don’t come close to these prices…….and therein lies the silver lining.
Africa must prioritize high integrity to attract premium pricing for its carbon markets. While global mandatory cap-and-trade regimes (like the EU ETS at $75 – $92/tCO₂e) remain largely closed to direct African project clearing, a sovereign-backed compliance corridor is emerging.
At best, Bilateral Article 6.2 authorizations – have established an African compliance floor between $11.00 and $13.00/tCO₂e, with CORSIA aviation units clearing at $20.00 – $22.55/tCO₂e and premium blue carbon reaching $35.00/tCO₂e. Meanwhile, unadjusted voluntary credits linger in the $3.00 – $8.00/tCO₂e basement!
The Bad
Bottlenecks, Structural Asymmetries, and the Gridlocks
This brings us to “The Bad” – the systemic bottlenecks and structural imbalances that continue to constrain execution across the continent.
How Africa Compares Globally
Despite Africa’s huge ecological significance, global capital allocation remains skewed. In mandatory compliance systems – such as the European Union Emissions Trading System (EU ETS), where allowances trade between €70 and €85 per tonne, or North American cap-and-trade programs in California, Quebec, and Washington – African projects have zero direct fungibility.
For instance, African supply cannot even be allowed to clear into the EU ETS compliance pool.
The continent’s commercial exposure remains concentrated in the low-priced voluntary market and emerging Article 6 and CORSIA pipelines.
While Africa generated roughly 75 million credits in 2024 (capturing 14% to 16% of global voluntary volumes), the Africa Carbon Markets Initiative (ACMI) has set ambitious targets: 300 million credits annually by 2030 ($6 billion mobilized) and 1.5 billion credits annually by 2050 (over $120 billion mobilised).
Scaling from 75 million to 300 million credits, however, requires clearing massive institutional and administrative hurdles.
The CORSIA Demand v/s Supply Bottleneck
Under CORSIA Phase 1 (2024–2026), international airlines are legally required to buy between 100 million and 236 million carbon credits to offset post-pandemic emissions growth. The demand is guaranteed, but the supply is virtually frozen. Worldwide, only 15 million to 40 million eligible credits are actually ready and cleared for airlines to buy – with the lion’s share originating from just one source: Guyana’s national forest programme.
Meanwhile, nearly 17 million eligible credits are stuck in administrative limbo. Airlines are actively looking for units to purchase, while African project developers watch their finished, verified credits sit idle.
The culprit isn’t the quality of the projects; it’s the bureaucracy. To count for airlines, credits require host-nation governments to sign official Letters of Authorisation (LoAs) and adjust their own climate balance sheets. Because national registries are slow and ministries hesitate to sign away their emission reductions, the pipeline has ground to a halt.
To make matters worse, host governments are slamming the door on their own pipelines. In a striking policy irony, countries like Kenya have removed almost-ready clean cooking projects from their Article 6 transfer whitelists to safeguard domestic NDC targets. This effectively locks developers out of premium compliance markets – even as the UNFCCC’s Article 6.4 Supervisory Body recently cleared clean cooking methodologies under the Paris Agreement Crediting Mechanism (PACM). The regulatory rails are opening at the UN level, but closing at the sovereign border.
The Auditing Deficit
Beneath these political frictions lies a technical constraint – data and the scarcity of domestic Measurement, Reporting, and Verification (MRV) infrastructure and sufficient accredited Validation and Verification Bodies (VVBs).
Project developers in Africa have to routinely wait between six and eighteen months for overbooked international auditing firms to fly in personnel to conduct field audits. These are the same challenges that delayed project approvals during the CDM days!
While global capital is investing in institutional platforms – such as Puro.earth’s new registry for agricultural carbon tracing and Isometric’s $50 million Series A round backed by the Intercontinental Exchange – the deployment of these sensor-based, satellite-driven MRV tools across rural African project sites remains in its early stages.
The Ugly
Baseline Scandals, The KOKO Collapse, and The Sovereign Oversell Trap
Finally, we arrive at “The Ugly”- the project governance failures, corporate bankruptcies, and accounting traps that can derail institutional credibility.
If anyone doubts that carbon markets can turn devastatingly ugly, they need only look at the Kariba scandal in Zimbabwe, the Sweden – Ghana Article 6 solar cancellation, and the collapse of KOKO Networks in Kenya.
The Collapse of KOKO Networks is the Ultimate Cautionary Tale for Africa
In February 2026, the African carbon finance and climate-tech ecosystem was shaken by the liquidation of KOKO Networks. KOKO engineered an aggressive, venture-backed burn model -subsidising cookstoves by 85% and bioethanol fuel by 25% to 40% – deliberately absorbing cash losses on every unit sold. The entire company was an existential gamble on generating ~6 million carbon credits annually under Gold Standard Project 11440, banked on securing premium compliance pricing under CORSIA and Article 6.
Then came their hour of reckoning – Kenya’s sovereign NDC protection.
When Kenya rolled out its new carbon market framework – controversially capping international transfers at 10 million tCO₂e through 2030 and deliberately locking clean cooking out of the Article 6.2 whitelist to meet its own domestic NDC – the sovereign trap slammed shut. Refusing to let low-cost domestic abatement walk out the door via costly Corresponding Adjustments, the state cut the very umbilical cord on cookstove authorizations that Koko was relying on.
Overnight, KOKO’s expected $20 to $30+ compliance assets were demoted to the voluntary market basement at $4 to $8. Operational revenues froze, subsidies evaporated, and the business collapsed into administration. Recent attempts by PWC to sell Koko assets are proving futile.
The ugly truth is unmistakable: sovereign Article 6 authorizations are an instrument of state policy, not an entitlement for venture-backed startups. When a company bets its balance sheet on monetizing carbon credits while ignoring the host nation’s domestic NDC arithmetic, the market correction is swift, ruthless, and devastating to the consumers left holding cold stoves.
The Kariba REDD+ Debacle: Deforestation Over-Crediting
In Zimbabwe, the Kariba REDD+ project (VCS Project 902) was long presented as a model for community-based forest conservation, covering nearly 785,000 hectares and selling tens of millions of voluntary credits to global corporations. However, independent investigations revealed that baseline deforestation rates were systematically inflated relative to observed regional forest loss. Verra launched an audit, and over 15 million carbon credits were canceled.
Local communities also received only a small fraction of opaque offshore transaction proceeds.
The political blowback was severe.
In May 2023, the Government of Zimbabwe blindsided project developers by enacting Statutory Instrument 118 of 2023 (Carbon Credit Framework for Zimbabwe), which invalidated unapproved private concessions, seized regulatory control over all carbon projects, mandated registration in a state-directed registry, and imposed a retroactive 50% state levy on all project revenue.
The Kariba scandal demonstrated how unverified voluntary baselines can trigger sudden state intervention, unsettling investor confidence across the region.
The Sweden – Ghana Article 6 Solar Dispute
Integrity challenges are not unique to private voluntary projects; they can also disrupt bilateral Article 6.2 engagements. In 2023, the Swedish Energy Agency (Energimyndigheten) contracted SEK 90 million (approximately €8.2 million) with developer Stella Futura to deploy rooftop solar PV and battery storage across commercial and industrial (C&I) facilities in Ghana, intending to transfer the resulting reductions to Sweden as ITMOs to satisfy its statutory net-zero targets.
The initiative was terminated by the Swedish government in mid-2026 before public funds were disbursed.
Why?
Swedish authorities ended the agreement after the project failed to deliver verified reductions within agreed timelines, compounded by corporate M&A disputes.
Furthermore, the project drew sharp criticism regarding additionality. In urban Ghana, commercial electricity tariffs are high, and grid instability forces factories to run expensive diesel generators. Rooftop solar and storage was already a commercially viable investment on their own economics. Carbon procurement was criticised as non-additional – amounting to public subsidies for business-as-usual commercial installations.
The Sovereign Oversell Trap
The most significant accounting risk facing African finance ministries under Article 6 is the danger of overselling low-cost domestic abatement.
Under the Paris Agreement, every ITMO exported carries a balance-sheet liability.
When an African government authorizes an ITMO transfer, it must add those emissions back into its national greenhouse gas inventory through a Corresponding Adjustment. If an African state authorises the export of its cheapest, most accessible mitigation opportunities – such as commercial renewable energy, industrial boiler efficiency, or basic grid enhancements – it forfeits the right to count those reductions toward its own NDC.
To fulfill its international climate pledge, that country must subsequently finance far more capital-intensive decarbonisation projects out of its own strained fiscal budget. Without disciplined marginal abatement cost curve assessments and technology whitelisting policies, African governments risk exporting their cheapest abatement assets to wealthy buyer nations, only to leave their own national balance sheets in climate deficit.
Strategic Blueprint: How African Nations Could Win the Carbon Race
How do African countries navigate these crosscurrents and build a sustainable, high-integrity carbon market?
The solution lies in recognising that there is no single project developer race; there is only one Article 6 infrastructure race. Long-term value will not be captured by individual project developers selling unadjusted voluntary offsets. It will be secured by sovereign states that construct the institutional, legal, and digital rails required to authorize and clear compliance-grade assets.
In my view, to turn this vision into reality, African policymakers and development partners should implement the following five strategic reforms:
1. Codify Carbon Property Rights and Statutory Authorisation Rules
National parliaments must enact primary legislation explicitly defining carbon ownership across vegetative biomass, soils, wetlands, and industrial facilities. Unclear property rights create legal vulnerabilities that stall investments or lead to contentious disputes, as seen in Brazil and Zimbabwe.
Statutes must therefore establish clear procedures for issuing Letters of Authorisation under Article 6.2, Article 6.4, and CORSIA, paired with published administrative fee schedules – such as Ghana’s $3 to $5 per tonne fee or Rwanda’s tiered levy – to generate predictable state revenue for public adaptation while eliminating bureaucratic delays.
2. Implement Strategic MACC Whitelisting
To prevent the sovereign oversell trap, national climate authorities must model marginal abatement cost curves across energy, forestry, industry, and agriculture. Low-cost, commercially viable technologies could be reserved exclusively for domestic NDC fulfillment (quota system).
Only high-capital, high-risk interventions that truly require international carbon finance to be viable – such as clean cooking transformations, capital-intensive mini-grids, and large-scale ecosystem restoration – should receive sovereign authorisation for Article 6 ITMO export or CORSIA trade.
3. Deploy National Registries Linked Directly to the UNFCCC CARP
Host nations must move past fragmented spreadsheets and build sovereign digital National Carbon Registries, following the examples of Ghana and Kenya. These platforms must maintain direct technical interoperability with the UNFCCC Centralised Accounting and Reporting Platform (CARP) and the Article 6.2 Annual Electronic Format (AEF).
Registries must integrate automated tracking of Corresponding Adjustments and utilize next-generation digital MRV protocols (such as emerging standards from Puro.earth and Isometric) to clear the technical bottlenecks currently holding up 17 million CORSIA credits.
To address sovereign cancellation risk for international buyers, states should package issuances with political risk insurance.
4. Build Regional Market Hubs (The ECOWAS Model)
Instead of fifty-four fragmented regulatory frameworks, Africa must pursue regional market integration. The initiative by the Economic Community of West African States (ECOWAS) and the West African Alliance on Carbon Markets and Climate Finance to establish a harmonised regional carbon market plan marks an important step forward.
Harmonising LoA procedures, standardising baseline methodologies, and pooling registry infrastructure will lower compliance costs for project developers while giving smaller nations access to much-needed institutional capital.
5. Enforce Statutory Community Benefit-Sharing
Long-term market viability depends on equitable local governance and transparent revenue distribution. National frameworks must mandate structured Community Development Agreements – following Kenya’s model of reserving a legally binding 40% minimum benefit share for land-based projects – and require verifiable Free, Prior, and Informed Consent (FPIC) protocols.
Rigorous enforcement of land tenure and human rights protections will eliminate illegal displacements, which have historically undermined forest initiatives across the continent, ensuring African credits satisfy the environmental and social integrity criteria demanded by institutional compliance buyers.
Conclusion: From Kyoto’s Heartbreak to Sovereign Execution
As I recall standing in the sugar cane fields of Mumias and the tea valleys of Kericho back in 2008 and 2012, it is hard to imagine that the market we were building has taken another eighteen years to mature. We have lived through the heartbreak of Kyoto’s CDM collapse, watching promising agro-industrial decarbonisation initiatives stall because the global rules favored Asian industrial gas destruction over African projects.
Today, the rules have changed, and Africa holds significant leverage. With an established African compliance price corridor of $11.00 to $13.00/tCO₂e for authorised clean cooking and sovereign transfers, premium blue carbon commanding $35.00/tCO₂e, and CORSIA units trading above $20.00/tCO₂e, the market is proving that it will pay for real environmental integrity, transparent governance, and verified community co-benefits.
Yet, the collapse of KOKO Networks in February 2026 and the scandal of Kariba stand as reminders that carbon markets can be unforgiving. When project developers build venture-backed models on inflated baselines, or treat sovereign Article 6 authorisations as automatic entitlements, the market will correct itself with severe consequences for vulnerable communities. The path forward requires building robust sovereign governance.
Yet, I am hopeful that if African nations can construct high-integrity digital registries, protect their domestic NDC inventories through disciplined whitelisting, enforce equitable 40% community benefit-sharing models, and lead regional integration, they will do more than avoid the historical traps of the CDM.
Geoffrey Omedo (PhD) is Technical Specialist (Climate and Energy Finance) at UNDP Nigeria